Director of National Intelligence James R. Clapper Jr. joins Frances Fragos Townsend, executive vice president at MacAndrews & Forbes Holdings Inc., to discuss the state of the intelligence community and current challenges and successes experienced across the enterprise. Clapper covers a broad array of intelligence-related issues including violent extremism and cybersecurity.

The Kenneth A. Moskow Memorial Lecture on Homeland Security and Counterterrorism honors the memory of longtime Council member Kenneth A. Moskow, who made this event possible through a generous bequest. His intent was to establish an annual event to bring together the leaders of the intelligence community and promote discussion on critical issues in counterterrorism.

TOWNSEND: Welcome, ladies and gentlemen, to the Council on Foreign Relations meeting with director of national intelligence, my good friend Jim Clapper. This meeting is part of the Kenneth A. Moskow Memorial Lecture on homeland security and counterterrorism, which honors the memory of Kenneth Moskow, a long-time CFR member, with a distinguished career in the intelligence community. Further details on his life and professional accomplishments can be found in the booklet of today's meeting.

I'd like to extend a special welcome to Keith Moskow and to the family and appreciate your support and your being here today.

So, usual format. I'm going to begin by asking the questions and then we will make sure I have left time for members to ask their questions.

You spent a lot of time testifying on Capitol Hill in the last couple of days. Last week you said that when a final accounting is done, 2014 will be the most lethal year for global terrorism in the forty-five years that the data has been kept: 13,000 attacks, 31,000 killed. There seemed to be a little, in Washington terms, kerfuffle with the secretary of state's statement on the same issue. Why don't you speak to that.

CLAPPER: Well, I think the secretary talked about—I had occasion to speak with him afterwards and I think he was thinking of a different context, which of course, context doesn't lend itself to soundbites in Washington, D.C. And I think what he was thinking about was the more cataclysmic case in point of the case with the Cold War. And he's right. In that context we are a safer country.

But I was looking at more the here and now, what happened in 2014 and kind of what we project out in the next year, which is the framework of normally our threat assessment. So just two different contexts, I think.

TOWNSEND: So about ten days ago the president hosted the Countering Violent Extremism summit at the White House. There were state and local partners, nonprofit partners, international partners, in the course of two and a half days.

The president sort of steadfastly refused to call it Islamic extremism, but the current threat is not Buddhists or Christians. How do you define a threat?

CLAPPER: Well, the way I look at this and the way I think about it is, the president has a much larger agenda. He is speaking to 1.6 billion Muslims around the world. We in the intelligence community are focused on the very, very small, way less than 1 percent of that 1.6 billion Muslims. So our proclivity would be to call these people what they call themselves, you know; IS is the Islamic State.

So I think our purposes, our missions there, if you will, are a little bit different, but in intelligence we need to be as accurate as we possibly can and call things in many cases what they call themselves. And so that's our focus, as opposed to his, which is much broader.

TOWNSEND: Let's talk for a minute. One of the great threats and concerns here in the United States has been about foreign fighters. In testimony, you referred to more than 20,000 foreign fighters, 3,400 of whom are Westerners, 150 of whom are Americans. We've seen cases of Americans trying to go over, women. There is a case right now of the British schoolgirls who folks are trying to find.

CLAPPER: The case here in Brooklyn.

TOWNSEND: The case here in Brooklyn. Despite airstrikes, why are the numbers of foreign fighters not just continuing but, according to the head of the National Counterterrorism Center, they're increasing?

CLAPPER: They are, and it' a great concern. And I was just in Europe a month or so ago, in fact in Paris and Brussels, and it is very much on the minds of European countries. The actual number I quoted in open testimony with the Senate Armed Services Committee last Thursday was about 180 Americans.

Now when I say that, that is those who have attempted to go and never got there, those that went and got killed, those that went and fought and went someplace else, and those who have come back, which is a much lesser number. So when you think of our population, 315 million, whatever it is, and a relatively small number of people in contrast to the European countries, where it is overwhelming in terms of their ability to monitor and surveil these people.

So it is a tremendous problem, you know. The question is why, you know, what is the attraction. I don't think there's any single explanation for it. There's a combination of factors, emotional, ideological, whatever. But this is a very bothersome concern and of course it gives rise somewhat to probably the most frequent threat that we here worry about, which is homegrown violent extremists.

ISIL particularly is very slick, very sophisticated, proselytizing and recruiting, and they are very astute users of social media. So this is a challenge for us as it is in Europe.

TOWNSEND: Director, you mentioned the small number that come back. What do you estimate, of 150 Americans, foreign fighters, what number of them do you believe have gone and actually come back?

CLAPPER: On the order of forty or so, and many of those are not—don't have nefarious purposes. We have since found they went for humanitarian purposes or some other reason that don't relate to plotting. In fact, at this point we are not aware of any of these people who returned who are engaged in plotting.

TOWNSEND: But there are plenty of people here, and those listening, I suspect, who are saying, but wait a minute. If you know they went, how is it they were able to come back, and should that be a concern to us.

CLAPPER: Well, if they come back and they are not involved in plotting or don't have a nefarious purpose, then that's their right and privilege as American citizens to come back.

TOWNSEND: Now we've heard in the past about another group, not ISIS but the Khorasan group in Syria, an al-Qaeda affiliate, being a direct threat to the United States. What is the status of our efforts against the Khorasan group?

CLAPPER: Well, we are watching them as carefully as we can. This is an expatriate group that found its way from Afghanistan, Pakistan. In fact, Khorasan refers to a region there. And they are very focused on plots against the West and then particularly us. So we're watching them very carefully.

TOWNSEND: Let me ask you while on the subject of Syria, is it, in your judgment, possible to defeat ISIS in Syria without also targeting Assad?

CLAPPER: Well, I think the way we are thinking about it now is, what is the priority. And the priority for us right now is ISIL, acknowledging the fact that at some point Assad has got to go because, as particularly many in Europe feel, that the magnet for all this extremism that has found its way to Syria is because of him.

So I think there's certainly recognition of that but I think the focus from a priority standpoint right now is on ISIL.

TOWNSEND: But that's not necessarily the view of our Arab allies, who, while they are committed to the air effort, if we want them to contribute ground forces, want Assad to go and want us to target him as well. So how do you keep the coalition together while the U.S. may want to do it sequentially when your Arab allies want you to do it at the same time?

CLAPPER: Well, this is probably, you know, this fits gets into the policy arena and the metaphor I like to use is that the intelligence community is down in the engine room shoveling intelligence coal and the people on the bridge decide things like that.

(LAUGHTER)

TOWNSEND: That was an elegant avoidance of the question. Let's talk about FSA for a minute. Clearly there has been a policy decision to train FSA. Ray Odierno, the chairman, the Army Chief of Staff, last week told Wolf Blitzer that the Army, the U.S. military will begin to train the FSA in March.

CLAPPER: By FSA you mean Free Syrian Army?

TOWNSEND: That's right. The Syrian opposition. Are we confident about vetting in terms from an intelligence perspective those that we are training so that they won't have to be a threat...

CLAPPER: Well, the challenge here is going to be the time it's going to take to recruit, vet and then train people, and then get up to a sufficient military center of mass, if you will, to have real impact. So the issue, at least for me as I watch this, is the time it's going to take to get sufficient horsepower, firepower, however you want to characterize it, that would have a significant impact on the battlefield.

TOWNSEND: Now let me ask you about, you know, the consequence of this five year-plus civil war that's been going on, it's the largest number of refugees and internally displaced persons since World War II.

CLAPPER: Right. You read my oral statement very carefully.

TOWNSEND: From a counterterror perspective, I worry that's also the largest recruiting pool you could possibly create for the future of ISIS and al-Qaeda. How do we position ourselves to try and thwart that?

CLAPPER: That is a great concern and is something that doesn't get a lot of attention. There are something on the order of 11.4 million displaced people just from Syria alone, which has literally flooded the adjacent countries. This is a huge strain on the likes of Lebanon, Jordan and Turkey, for example. And so as best they can to try and cope with this onslaught of refugees, and of course you can imagine some of the conditions, living conditions, which of course just gives rise to—creates the environment for recruiting.

And so that's a great concern that I have and it is hard for us to reach directly into these refugee camps. I will say, though, that one of the things that I think we have awakened to is the need for a very robust effort at the counter narrative, and this is particularly so with ISIL, since they are very, as I said before, very slick, very sophisticated at appealing to, you know, a fairly large segment of people, as they will in these refugee camps.

TOWNSEND: So to use your analogy, you are shoveling the intel into the system below deck. Is this an issue that the policymakers are grappling with, the refugee camps and the potential future for recruitment?

CLAPPER: Well, I think the policy apparatus, the policy-making community in Washington is dealing with this whole potpourri, this myriad of issues in Washington. It always interests me, you know, when I watch TV and how simple things are, and somehow in the situation room they ain't so simple. And this is the kind of dilemma we have today, the diversity of crises and challenges we have around the world.

I've been, in one capacity or another, in the intel business for fifty-two years and I don't remember a time when we had been beset by more crises and challenges around the world, and a diversity of these crises and challenges than we have today.

TOWNSEND: So we can't sort of talk about Syria without also talking about Iran. Senator Reed, during your testimony, asked you the question if nuclear negotiations fail, if we were to intervene against Assad in Syria, what is your assessment based on the intelligence about the likelihood Iran might become more aggressive against U.S. interests, whether in Iraq or around the world.

CLAPPER: Well, I honestly don't know, you know. People want clairvoyance, you've got to spend a lot more money on intelligence, I guess. I don't know, you know, what they'll do if there's not a deal. I know they want one very badly because they want—in the worst way, want sanctions relief.

We are at a very delicate time right now with respect to negotiations, and so I don't know how that will come out. I'm not sure just what that would do if there is not a deal, how that would—what impact that would have on Iranian behavior. I don't know that they would change their basic policies, particularly as they pertain to regional influence. I don't think it would change it much.

I think they would continue to do as they have, and clearly they are—they have big interest in the outcome of things in Iraq. They very much consistently wanted a Shia-friendly government that they can influence in Baghdad. And so that will continue.

I think they will continue sustaining their surrogates, Hezbollah. They have an interest in Syria. So I don't see that changing, regardless of the outcome of the negotiations. In fact, I made the point to Senator Reed, for whatever reason those are kind of separate and distinct right now. They really haven't made the connection.

TOWNSEND: And I found that interesting. The word you use is they have compartmentalized, right? The problem is, when they care—we saw during the Iraq war when we had U.S. troops there, they were not the least bit shy when they didn't like U.S. policy, about targeting our military. But you don't think they will get more aggressive against us?

CLAPPER: The issue for them, for the Iranians, is sustaining their control, influence, over the Shia militia. There are somewhere in the neighborhood of seven or eight major—there may be more, but the major Shia militia organizations in Iran, and I think as long as the Iranians perceive that we are doing what comports with their objective, which is eliminate ISIL, as long as we are on sort of a parallel course there, they will do what they can to control the militias.

And of course they have long harbored resentment of the U.S. presence. They certainly did when we were there and they do now and they, you know, look at us as—their rhetoric is that we are occupiers. And so it's a concern of mine as to whether while we think we've messaged the Iranians about the militias, that's not to say that they have perfect command and control over all—they, the Iranians, have perfect command and control over the activities of each militia or each militia member.

TOWNSEND: So speaking of the groups that the Iranians influence and control, let's move south to Yemen. Was it an intelligence failure or did the intelligence community predict the Houthi takeover of Yemen?

CLAPPER: Well, another old saw of intelligence. You know, the first week in intelligence school you learn there are only two conditions in life. There is policy success or there is intel failure. There is no other condition in life.

(LAUGHTER)

No, it wasn't a failure, and anyone who is, you know, remotely acquainted with the history of politics in Yemen and its history understands that the governmental institutions there have always been very, very fragile. And so as the Houthis expanded their area of influence and as they infiltrated, particularly in the Sanaa, infiltrated into the ministries of the government, infiltrated the intelligence and security organizations, it was pretty clear where things were going and it was just a question of time.

TOWNSEND: And regarding timing, it has been said to me it was sort of the dog that caught the bus unexpectedly, but it fell, that the Houthis gained power more quickly than...

CLAPPER: Well, yes, that's a great question. And here's where the Houthis and the ISIL have something in common. When it comes time to govern, they find out that that is not inconsequential undertaking, that's a different proposition. And the Houthis are discovering that in Yemen. All of a sudden now, you know, like it or not they are responsible for the economy there, which is in extremis. And similarly, ISIL is straining to provide governance and municipal facilities in a place as large as Mosul, for example. So these are two common phenomena that both these groups are experiencing.

TOWNSEND: So let me ask you, there was a recent—there was a development this morning. The Houthi had taken captive a senior Saudi diplomat. He's been in custody for some time. They just released the Saudi diplomat this morning. Are we to read into that...

CLAPPER: Being held by the Houthis or by AQAP? I thought he was held by the AQAP.

TOWNSEND: My question to you, what are we to read from the release? If he was released by AQAP—I think you are right, I'm sorry—are we to be concerned? Should we be concerned about Saudi interaction with extremist groups in Yemen?

CLAPPER: Well, I don't know. I honestly don't know what to read into that. We will have to sort that out to determine the significance. Normally, you know, AQAP, AQAM, these groups will use kidnapping as a way of raising revenue. So exactly what they had in mind there I don't know. We will have to sort that out a bit.

TOWNSEND: Well, we know the Saudis have had an incredible relationship and intelligence insight into AQAP. They have helped us thwart attacks. They have been incredible allies, and so clearly they have some insight...

CLAPPER: Well, they do, and of course they are very concerned about the rise of the Houthis, a Shia group, which has certainly relations with and gets support from the Iranians. And so in the minds of some, this maybe conjures up another chapter of Hezbollah. I don't think that's the case. I think the Houthis are much more independent than that, but the Saudis classically have been very concerned about the Houthis right on their border.

And so the emergence of the Houthis as a dominant political force in Yemen is a matter of great concern. I would emphasize what you said, Fran, about what tremendous partners the Saudis have been and are.

TOWNSEND: So let's move now to Russia. There's a whole host of issues between Russia and Ukraine, but let me start. Nemtsov, an outspoken opposition figure against Putin, was assassinated in broad daylight. It just so happened a snowplow blocked the camera that would've captured the whole thing. Is there any chance that this was not perpetrated by Putin and his allies inside Russia?

CLAPPER: Well, that's, you know, an obvious theory. There are those—some Russian Kremlin officials have suggested that we did it just to create hate and discontent in the political fabric of Russia. So there is a long tradition of that sort of thing. You know, to paraphrase Stalin, when you have a problem, get rid of the man. No man, no problem. So I don't know. We don't know. We don't have any unique insight as to who did this, and I would venture the history has been we never do find out. Although I am sure that Putin himself personally is going to investigate.

(LAUGHTER)

TOWNSEND: So you were asked during your hearing by Senator McCain, based on the intelligence assessment, we see the Russians arming their forces in Eastern Ukraine. Should we, and what is the discussion within the administration on arming the Ukrainians?

CLAPPER: Of course that's a policy thing. But I was kind of prompted, I guess, you know, what's my own view. By the way, the Russians are doing more than just providing arms. They have moved units, particularly last August, and really reversed the, you know, battlefield situation there when the Ukrainians were really moving east and the Russians stepped in and stopped that.

I was recently in Kiev about a month or so ago and I was, you know, quite struck with the intensity with which the Ukrainians look at this. And so I look at it more as, you know, I have been an advocate for arming them with legal defensive weapons, more to bolster their resolve and bolster their morale that, you know, we are with them.

Again, this is—I will reiterate now what I said last Thursday, that this is not company policy. This is just me, Jimmy Clapper, speaking, and this is something that is in deliberation right now among the policy community. It won't be an intel call.

TOWNSEND: So there is no question Russia has been persistently aggressive. Crimea, now Eastern Ukraine. There are those who would say that there is also intelligence suggesting further aggression in the former Eastern European states—Latvia, Estonia. How concerned are you about that and how likely do you believe that is?

CLAPPER: Well, first of all I think, you know, what motivates, what drives Putin, what's his worldview, and I think he is somewhat of a throwback to the halcyon days of the great Russian Empire. That's kind of the way he looks at things. And so on the 22nd of February last year, when Yanukovych just kind of left, suddenly, Ukraine, I think he saw an opportunity there which he'd been waiting for, first to take back the Crimea, which, you know, has always been in his mind a tremendous injustice. And of course he considers the collapse of the Soviet Union one of the greatest geopolitical disasters in the history of the world.

And so you kind of see where he's coming from. And particularly with the special relationship between Russia and Ukraine, which they refer to as "little Ukraine". And so this is another occasion not unlike Georgia. The number one foreign policy goal of Russia is control of the former Soviet space. So that's what they did in Georgia and so it is again here in Ukraine.

Now I do think there is a difference, even in their mind, with the Baltic states because, unlike Ukraine of course, they are NATO members. So you have the article 5 thing, which I think does serve as a deterrent. That's not to say, though, that I think the Russians won't be doing, you know, soft power kinds of things—espionage, information operations, propaganda, this sort of thing which you can, you know, look at Moldova or Transnistria, and they will continue to do that.

TOWNSEND: So last week the president announced the establishment of the Cyber Threat Intelligence Center. It is by my count will be the sixth cyber center in the government.

CLAPPER: Actually there's more than that..

TOWNSEND: OK. Well, however many there are, why is this one necessary and what function does it perform that's not redundant?

CLAPPER: Well, I think for one, cyber pervades so many aspects of our lives and it pervades so much of what we do in intelligence these days. So what this element is intended to do, and it's very small, you know, it's not going to be that many people. And what I think we can do is to bring to bear more integration within the intelligence community and our reporting on cyber threats.

And I liken it to what we now do with the president's daily brief, where we have responsibility for putting together the ultimate word, if you will, by integrating the inputs and views of the entire intelligence community. And that's our intent with this, our modest intent with this group is to do a better job of integrating the intelligence picture with respect to cyber threats.

So we are in the midst now of—I say we, my deputy Stephanie O'Sullivan and I—are in the midst of making a lot of parish calls among all these groups, all of whom are concerned and threatened and all that sort of thing, just to try to allay concerns because the objectives here, I think, are pretty modest but I think we can make some value-added contribution in terms of better job of an integrated threat picture with respect to cyber.

TOWNSEND: So, can't speak about cyber these days without talking about the recent Sony attack. There has been much sort of theorizing and dispute out there in the media. How confident are you that it was appropriately attributed to North Korea?

CLAPPER: Very confident.

TOWNSEND: I want you to share with the group because you had the distinct honor to go and get the captives that were released. It's sort of a fascinating story if you are willing to share it.

CLAPPER: Well, yes. And coincidentally of course, the attack occurred against Sony about a week or two after I was there, so I probably won't be going back. There had been, you know, some back and forth with the North Koreans about, you know, releasing the other two citizens. We had one, Jeffrey Fowle, was released in October. The difference here was he was not yet in the North Korean penal system.

And of course typically the North Koreans like to secure, if they can, some concessions. And so there was some back and forth about a presidential envoy coming to Pyongyang to secure the release of our two citizens. And the North Koreans wanted someone who was a member, a current member of government, and a member of the National Security Council.

Somehow—I'm not sure where the suggestion came from, whether it was from them or the White House, but my name came up, and amazingly, the North Koreans agreed. I had served in the Republic of Korea in the early '80s while I was on active duty as a director of intelligence for U.S. forces Korea, and kind of followed developments on the peninsula ever since.

So they, interestingly enough, bought into my being the envoy. I thought actually the New York Times had the best explanation of why the DNI: gruff, blunt, a relic of the Cold War, ideal for North Korea.

(LAUGHTER)

So I was on a trip, in fact I was in Canada, and was in Ottawa and I was due to come here to speak here at CFR and as well do a taping with Charlie Rose, which I did this morning. So I'm making up for that now.

Anyway, I got a summons from Susan Rice saying, you need to hustle back, so I went to a meeting, flew back from Ottawa early, joined the meeting at the White House in which we were discussing things like don't bow, don't take flowers, don't smile, you know. Lots of useful policy things like that.

(LAUGHTER)

Anyway, I ran home and repacked my bag and back out to Andrews and left about 2 o'clock—this is November 4th, I think, and we had some airplane challenges on the way out there. And finally arrived on the night of November 7th in Pyongyang and went immediately into dialogue with the North Koreans.

I was met by a political four-star, General Kim who is a minister of state security. And so we had this long slow roll in a limo from Sunan airport downtown to Pyongyang to the state guesthouse. And we immediately began deploying each other's talking points in the car. I immediately got a little hinky about I wasn't getting any assurances that we were going to get our two citizens back.

So they dropped us at the state guesthouse, which is a very nice place, and then we were met by the official who touted himself as my counterpart. He was another General Kim, a military four-star Kim who is director of what's called a Reconnaissance General Bureau, which is an amalgam between their intelligence and special forces.

Then back in the limo back in downtown Pyongyang to a restaurant, a private restaurant which interestingly enough was over a bowling alley. In fact I remember, I was trying to make light conversation—which they don't do—"oh, people in the DPRK bowl?" and he wasn't having it.

(LAUGHTER)

Anyway, we went to the restaurant and it was very nice, and having served in Korea and developed a liking for Korean food, and this marvelous twelve-course meal and the best kimchee I've ever eaten in my life was in North Korea. Unfortunately, it wasn't a very enjoyable because—pretty terse conversation, pretty tense and a lot of arguing, you know, pointing at each other's chest and that sort of thing.

TOWNSEND: Do we think that's why you got stuck with the check?

CLAPPER: They don't like us. They like our money, you know, I guess. Anyway, so at the end of the evening I did have a letter from the president, which didn't say a great deal other than just, you know, officially authenticating me as his representative and, you know, it would be viewed by the U.S. government as a positive gesture if they released our two citizens.

Since they didn't hand me a schedule or agenda or anything when I got there, we deployed the letter with the RGB director, and back to the state guesthouse. The next day we just kind of hung out, waiting around for them to do something. We had a doctor with us and I did ask if the doctor could visit the two citizens, which they did agree to, although instructed the doctor not to say anything to either of our citizens about the possibility of them being released.

So about 11 o'clock we're just hanging out, and it's not like you can call a cab or something and drive around. This representative of the minister of state security came to the state guesthouse and informed us that I had been demoted, that they no longer considered me a presidential envoy, since I was there simply to, you know, gain the release of our two criminals. Moreover, they could not any longer guarantee the safety and security of me or my small party. Thanks.

So what do you do when you're killing time? So we had lunch. Hung around, and hung around. About 3 o'clock, 3:15 in the afternoon, the same gentleman came back and said we had twenty minutes to pack up, check out and get out of here, we're leaving. So we pile in the vehicles. Took us downtown to the Koryo hotel, which is a pretty nice hotel in Pyongyang. Escorted us upstairs to a room about half the size of this room and in the middle of the room was a racetrack-shaped table.

On one side were three or four North Korean officials who were, I found out later, representatives of the North Korean prosecutor's office. On the other side were three or four chairs for me and a couple of people with me. So we were just sitting there. It seemed endless but it was probably only twenty minutes, and no one is saying anything, can hear a pin drop, and they're staring at us and we are staring at them.

And that's the first time I actually saw our two citizens, Bae and Miller, who were in their prison garb. So we didn't talk to them or anything. And then finally the door opens and in enters the aforementioned minister of state security, the gentleman that had met me the night before. We all stand up like he's a judge or something and he comes in and they read a proclamation, which included a litany of the heinous crimes that our two citizens had rendered and performed, and the generosity of the DPRK government for allowing—that they would grant amnesty at the request of the president.

Of course that was translated and at the end of it Minister Kim turned to me and said, "well, I hope we can have more dialogue in the future but not about your criminals". And I said thanks. And they all walked out with our guys and they changed clothes in the hotel and out to the airport and we left.

And I must say—we had to stop at several places on the way back but got to McChord Air Force Base about 8:30 Saturday night, the 8th, I guess it was. And I went up in the cockpit and just watched the family reunions, which was actually gratifying and very emotional to watch that. And right after that got a call from the president thanking me and my team for a successful mission. So had a gin and tonic and went to bed for a while. That was it.

(LAUGHTER)

TOWNSEND: So I've got two more quick questions about cyber and then I'm going to open it up to the members. One, is it in your mind possible that North Korea could have pulled off the Sony cyber attack without the help of either Iran or Russia or China or some other state power?

CLAPPER: Oh, yes. They are not at the same level of sophistication and capability as, say, the top tier, which means Russia and China, but they engage in cyber exploitation, et cetera, you know, constantly against the Republic of Korea.

So they are astute at this. They have a whole infrastructure, much of which is under the auspices of the aforementioned Reconnaissance General Bureau and my good friend General Kim. So they are quite capable.

TOWNSEND: Let me ask you. We've seen numerous public reports about DDoS, dedicated denial of service, attacks against U.S. financial institutions. What is the likelihood in your judgment, based on the intelligence, of a Sony or Aramco-type of destructive attack against U.S. financial interests?

CLAPPER: I spoke to that in my oral statement, that the situation we are in in cyber is—I think we attach less likelihood to the notion of a, you know, cyber Armageddon. That's not to say it's impossible. Sure, it is possible, but less likely.

Instead what we are faced with is this sort of insidious growth where cyber actors do increasingly more nefarious things in kind of a gradual incremental way. So it's not going to be some dramatic thing but rather a gradual increase.

So last year, as I pointed out, was the first time we had destructive cyber attacks on our soil, first with the Las Vegas casino Sands Corporation, and then of course with the Sony attack. If you go back and sort of trace the trendlines in cyber, phishing, DDoS, and then—so what's next? Well, deletion or manipulation, which of course affects the integrity of the data, is probably next.

TOWNSEND: Pretty scary stuff. OK. At this time I would like to invite members to join our conversation with questions. A reminder this meeting is on the record. Wait for the microphone, speak directly into it, please stand and then state your name and affiliation. Please limit yourself to one question and keep it concise to allow as many members as possible to speak. Let's start here.

QUESTION: Thank you. Director, my name is Roland Paul, I'm a lawyer, I've been in government a couple of times. Absolutely thrilling story about your trip to North Korea, I might add. My question relates to Syria. According to the press there are 40,000 to 80,000 Syrian rebels who are not affiliated with ISIL or al-Nusra. Could you correct that order of magnitude, and also tell us what might be the U.S. government relationship with those groups?

CLAPPER: Well, first of all, these numbers and estimates get tossed around quite a bit. I was asked about that during my hearing with the Senate Armed Services Committee. So I think the first thing is, just to tell you flat out, we do not have Census Bureau door-to-door survey fidelity on these groups. I wish we did but we don't.

There are by one estimate rendered last year, some 1,600 of these opposition groups. So determining their size and capability and, importantly, their ideological or political leanings is very, very difficult. So all of these numbers that you hear, we do our best from a variety of sources to assess the composition of these groups and their leanings. But this is a very, very difficult thing to do.

So there are some portion of our oppositions who are regarded as moderate. Moderate these days is increasingly becoming anyone who's not affiliated with ISIL. And so, you know, we are attempting to engage with them, and that's the whole point of the train and equip proposal—project that the Department of Defense is gearing up for, is to vet, recruit and train and equip oppositions in sufficient size and capability to actually make a military difference.

And so one of our challenges is, again, the recruiting and vetting part. So we picked people that not only are moderate, whatever that is, but also we have to be sensitive to complying with the international rules of law, which in this environment is a pretty tough order.

So this is a very, very complex situation in Syria, compounded by the fact that we are actually not there, which is very different than the situation we have in Iraq, where we are there. And so from an intelligence perspective and for our ability to exert leverage and influence, it's much, much easier in Iraq than it is in Syria. That's a long-winded answer to your question but it's a tough one.

QUESTION: Ken Roth, from Human Rights Watch. I'd like to follow up on Iraq. I think at the policy level there's broad recognition that the Shia militia and the abuses and the sectarian way in which they operated was a big reason why so many of the Sunni tribes would join with the U.S. to defeat al-Qaeda in Iraq, either by neutral or actually joining with ISIS because they were so fearful of the Shia militia. And that was part of why Maliki's departure was orchestrated.

Today the Human Rights Watch people on the ground still find the Shia militia engaging in what you might call ethnic cleansing as they take various Sunni villages. My question to you is, what are the prospects of a nonsectarian and rights-respecting Iraqi military emerging? When do you see that happening so that Iraq isn't dependent on the Shia militia?

CLAPPER: Well, I think you have to start from the premise that Iraq is inherently sectarian. That's just the nature of the country. The country of Iraq is somewhat of an artificial creation going back to colonial days. And so you have the Kurds and then the Sunnis in the north predominantly and Shias in the south.

And you're quite right. The reason that ISIL was so successful, yes, it had to do with their capabilities and prowess on the battlefield, but they were dealing with a receptive constituency in northern Iraq because of the intense hatred of the Maliki government, which of course is imposing the Shia view on them.

And so the challenge for Abadi, who, you know, does I think recognize what he has to do in terms of more inclusiveness of the Sunnis, because I really don't think there's any way of reversing or changing the picture fundamentally in Iraq unless the Sunnis are included, and unless that's done in a way that's compelling and convincing to them, and so far that's been a struggle. Abadi has a challenge, the political challenge of trying to keep his Shia base in line with him and supportive of him. So he has got a very difficult balancing act.

Then you have the complication of the Iranians, who want a Shia-friendly government in Baghdad that they feel they can influence because it's right next door to them. So he has a confluence here of a whole bunch of competing and conflicting forces that he has to deal with. And it is a very tough issue. But certainly he, I think, is in a better position to do that than certainly his predecessor.

QUESTION: Bettye Musham, Duke Islamic Studies Center founder. Have you had any conversations or concerns about the Saudi's funding all of these madrassas which are promoting the Wahhabi doctrine of conservatism? And I know in Turkey there are over 500 of them over a period of time.

CLAPPER: That is a concern, and I think there is change afoot in the Mideast. It's not going to occur overnight, but I think, you know, these brutalities, publicized brutalities by ISIL, beheadings and immolations and the like, have really had a galvanizing effect, even in the Mideast. And so I think it is bringing about a change.

One thing we see is the donations to extremist groups from many of these countries, donors in the countries, are declining. Some of that is through government activity, government oversight and with our help. But in the end this is about—I hate to use a cliche from my war, southeast Asia, but it is about the hearts and minds here.

And ultimately that is what's going to make a difference here, is the narrative or counter narrative, starting with education. And so I think you are quite right to highlight that. I do think, though, that there is a change afoot, but it is not going to happen by close of business next Friday.

TOWNSEND: Director Clapper, can you just give us a sense of scale? You said that the donations from the Gulf countries are declining. I'm not asking for precise numbers off the top of your head but give us an order of magnitude.

CLAPPER: I really can't do that because it varies from place to place and it varies from who they are donating to and all this sort of thing. I will just make the statement in general, there has been a big decline. The amount of donations that ISIL got was a very, very—less than 1 percent of their total revenue from last year. I can say that.

QUESTION: In recent days the government reauthorized the telephone metadata collection program through June 1st, when there is the sunset date obviously of section 215 of the Patriot Act. What do you want to see happen after that?

CLAPPER: Well, what we've agreed to, Attorney General Eric Holder and I last September signed a letter saying that we supported the notion of moving the retention of the data to providers, in a bill that actually came out of the Senate from Senator Leahy. So we signed up to that. I think that's the only thing that's realistic if we are going to have this at all.

You know, in the end, the Congress giveth and the Congress taketh away. So if the Congress in its wisdom decides that the candle isn't worth the flame, the juice isn't worth the squeeze, whatever metaphor you want to use, that's fine. And the intelligence community will do all we can within the law to do what we can to protect the country.

But, I have to say that, you know, every time we lose another tool in our toolkit, you know, it raises the risk. If that tool is taken away from us, 215, and some untoward incident happens which could have been thwarted had we had it, I just hope that everyone involved in that decision assumes responsibility. And it not be blamed, if we have another failure, exclusively on the intelligence community.

QUESTION: And just to be clear, with the private providers maintaining that data, do you feel you've lost an important tool?

CLAPPER: Not necessarily. It will depend, though, on, for one, retention period. I think given the attitude today with providers, they will probably do all they can to minimize the retention period, which of course from our standpoint lessens the utility of the data because you do need some—and we can prove this statistically—you do need some historical data in order to discern a pattern.

And again, you know, 215 to me is much like my fire insurance policy. You know, my house has never burned down but every year I buy fire insurance just in case.

QUESTION: Celia Mendoza, Voice of America. You mentioned that there is a lot of threats that we have to be aware of. Venezuela right now is in a very dire situation and they have close relationships with Iran, with Syria, as well as with Russia. How do you see the relationship between the United States and the intelligence you are gathering, especially with all the accusations made by the government of Nicolas Maduro against the United States?

CLAPPER: Well, Venezuela is going through a difficult time right now, for lots of reasons. I think economically obviously the price of oil has had, because of their disproportionate dependence on oil revenue, mostly from us, that's had an impact on their economy. President Maduro, maybe not the most astute head of state, I'll put it that way, is having trouble coping with this because of the economic stresses it's putting on his country. And of course what he's most concerned about is people turning out in the streets, which would be potentially a real threat to them.

QUESTION: Sarah Leah Whitson at Human Rights Watch. I wanted to ask you some more about the metanarrative, and in particular the extent to which you think the U.S. is really best placed to take on a metanarrative that will appeal to people who possibly support Islamist extremist politics. And also about the metanarrative of some of the allies in the anti-ISIS coalition, like Saudi Arabia, which models a lot of the behavior, like beheadings and jailing and flogging of journalists that ISIS and al-Qaeda actually copy.

And I wonder whether there has been any effort to influence the metanarrative of the important partner, Saudi Arabia.

CLAPPER: Well, of course. We have, and I think the question raises a good point about the extent to which we, the United States, can lead a narrative, given the general lack of popularity of the United States in many of these countries. I was quite struck with the interview I saw yesterday of King Abdullah of Jordan, who I have great respect for. And I think he said some things worth considering, worth thinking about, which is essentially "this is kind of our thing. This is something we have to do".

And I don't think he intended it in just a military context, but in the context of getting ahead of or countering the larger narrative here. And you know, we are doing this in all kinds of ways to try to counter the narrative but I think in the end, you know, our ability to do that and to really influence change in attitudes and change in worldview is only going to come about when the people there themselves do that.

QUESTION: Paula DiPerna, NTR Foundation. Thank you very much for your service. And the question is, with—beyond the sort of local assets, people who obviously you have to remunerate, can you speak to the degree to which intelligence gathering has been privatized, outsourced, contracted out, both in terms of percentage and dollar value?

CLAPPER: Well, actually it's declined. At least as a formal part of the intelligence community, that which we've contracted out or hired contractors has declined by 40 percent since 2007, and in our 2016 submission it is going to go down more. So we are less and less dependent on contractors.

This of course is the classical historical cycle that we go through in the intelligence community, where the pendulum is swinging back from the mushrooming that we did right after 9/11, where the intelligence community, which had been shrinking for five years, suddenly expanded. And the fast way to do that, of course, is to hire a lot of contractors, which we did.

So now that our funding is going down, and in the interest of trying to protect our government workforce, which I feel very strongly about protecting these great people, young people that we've brought on since 9/11, so we are peeling off contractors, so it's actually declining.

QUESTION: Jeff Laurenti. I wonder, Mr. Director, if you could comment on the love triangle between American, Afghan and Pakistani intelligence as the United States is disengaging. How reliable is the Afghan intelligence network in terms of its penetration of the Taliban? Do you see any signs that the Taliban are beginning to feel demoralization? And how genuine is the ISI in Pakistan's seeming, slow-creep embrace of normal relations with the Afghan government?

CLAPPER: Well, those are a great bunch of questions there. I start this from the premise that every country, no matter who it is—and I have dealt with a lot of them from an intelligence perspective—they start from the premise of what is in their national interest. That may or may not comport with what we like, necessarily. And so we have to recognize the reality of how things are in the world.

So in the case of the Pakistanis, penultimately what motivates their policies, to include their conduct of intelligence, is what they consider their existential threat, which is India. And so that governs a lot of what they do.

Now I will tell you, in line with what I said earlier about the public savagery and brutality of ISIL, the attack on the Pakistani army school in Peshawar had a galvanizing impact on public opinion in Pakistan. And that in turn of course influences the government and influences ISI.

You know, we had a very low point in our relations with Pakistan and, you know, as a result of the Abbottabad raid in May of 2011, and since then it has gradually come up. I think the Pakistanis realize the impact of when we depart from Afghanistan and that they need to be more active and viable partner, and they are. There has been a great improvement in their approach and their cooperation with us and their openness. But there are certain things that they probably fundamentally are not going to change, again because of what drives them.

With respect to Afghanistan, I think the intelligence services there, particularly the national one, is good and getting better. We've spent a lot of time and effort at enhancing their capabilities, but they too are going to behave in what they believe are their best interests.

I might say with respect to Afghanistan that I think I would commend to you history. In our last national intelligence estimate we devoted an annex to the Soviet experience. And the lesson learned here is that when they left in 1989—they continued very robust financial support to the Afghan government to the tune of $3 [billion] to $6 billion a year normalized I think in 2011 dollars. When they left, when that support stopped on the 31st of December, 1991, about four months later the government of Afghanistan collapsed.

So the big lesson here is not so much, you know, the pace of our drawdown. It's what happens afterwards in terms of external donors' financial support which the Afghan government is so highly dependent on.

TOWNSEND: Director Clapper, I think that it is 2 o'clock and I want to be respectful of your time. I want to thank you for being here with us, and just on a personal note, let me thank you for your friendship, your mentorship, and for your public service.

CLAPPER: May I say one last thing. It is a great honor for me to be here in this series in light of who it was named after. And the family is here today, and I just want to say they epitomize, and Ken did, the spirit of so many people who serve in the intelligence community today who came to the intelligence community—came back to the intelligence community, as I did, after 9/11.

And so I do want to take note of Ken and his tremendous legacy, and it is an honor to be here in a series named after him. So thanks.